Suppose an industry initially had been perfectly competitive and then became a monopoly. Which of the following would occur?
a. Consumer surplus would decrease.
b. Consumer surplus would increase.
c. Producer surplus would decrease.
d. The deadweight loss would be eliminated.
Ans: a. Consumer surplus would decrease.
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Refer to Table 13-2. What is likely to happen to the product's price in the long run?
A) It will fall. B) It will remain constant. C) It will increase. D) This cannot be determined without information on its long-run demand curve.
The expected damage to innocent third parties per unit of the good produced is shown as the "external cost" in Figure 27.1. An unregulated competitive market for the product produces a quantity of Q* units, which sell for a price of P* per unit. The amount producers of this product could reasonably afford to spend per unit produced in order to successfully insulate themselves from possible just and reasonable jury awards in lawsuits is 
A. greater than the external cost. B. zero. C. equal to the external cost. D. greater than zero but less than the external cost.